Trading update : 3 October 2025

In a largely unexpected twist, US stocks continue to outperform global markets despite the tariff chaos, as solid growth and Fed rate cuts provide support. While Chinese equities are enjoying their best streak since 2018, other parts of Asia are struggling. The outlook is not all rosy, though. Deutsche Bank is warning that America’s AI-driven growth spurt may be unsustainable without continued massive tech spending. The AI boom is also driving up electricity costs in data centre hubs, stoking inflation. We also share two strong local stock picks to consider.

Buy America

The “sell America” trade is losing steam, with investors shifting to a “sell the rest of the world (RoW)” strategy. Despite all the tariff drama, US stocks are holding up better than global peers, backed by solid growth (Q2 GDP was revised up to 3.8%) and a Fed that’s easing again. Trump often softens his policies when US companies look set to take real damage, which has helped markets shrug off tariff shocks. Meanwhile, Europe lags, and Asia is a mixed bag. While China’s AI-fuelled tech boom and trade truce support growth, and Japan has won auto concessions, India is suffering most from US trade measures. If trade tensions flare again, the market now expects US assets to outperform, while non-US assets could be more at risk.

China rising

Chinese stocks are set for their best run of monthly gains since 2018, driven by optimism over AI, easing geopolitical tensions, and expectations of policy support. Bloomberg reported that the MSCI China Index (MCHI-NASQ) has advanced nearly 9% in September, marking its fifth straight month of advance, and has rallied about 40% since bottoming out in April. The rally is expected to continue, but valuation concerns and a weak economy may slow the pace of gains, with investors keeping a close eye on China’s Golden Week holiday and the Communist Party’s upcoming Fourth Plenum.

US shutdown

The deadline to avert a US government shutdown has come and gone, which means non-essential federal workers are furloughed. The US government began shutting down as Congressional Democrats and President Donald Trump clashed over health-care spending, with Democrats blocking a Republican stopgap funding package that didn’t address their demands. President Trump said his administration may permanently fire “a lot” of federal workers in the event of a shutdown. The shutdown clouds the outlook for the world’s largest economy and threatens to delay key economic reports used to gauge the Federal Reserve’s path for rate cuts.

Recession reset

A research note recently sent to clients by Deutsche Bank explains that the US economy has avoided a recession thanks to Big Tech and the AI boom, but cautions that these tailwinds cannot continue indefinitely. Quoted by Bloomberg, George Saravelos, Global Head of FX Research at Deutsche Bank, said the US would be close to recession this year if Big Tech hadn’t spent so heavily on building new AI data centres. “The bad news is that in order for the tech cycle to continue contributing to GDP growth, capital investment needs to remain parabolic. This is highly unlikely,” Saravelos said. Beyond the infrastructure projects, which directly drive growth and jobs, AI technology and the services sector will need to start making a meaningful contribution to the GDP to avoid a recession.

Powering inflation 

According to Bloomberg, AI is driving inflation as the power demands from the massive AI data centre complexes rapidly drive up electricity bills, piling onto the rising prices for food, housing and other essentials already straining consumers. That’s starting to have economic and political reverberations across the country as utilities and local officials wrestle over how to divvy up the costs. Yet, those same facilities are a linchpin of US leadership in the global AI race. Bloomberg analysed this data in relation to data centre locations, from DC Byte, and found that electricity now costs as much as 267% more for a single month than it did five years ago in areas located near significant data centre activity.

UK consumer pinch 

Price inflation in British shops is also rising, hitting its highest level in 19 months as consumers pay at the checkout for a slew of new taxes that have ramped up retailers’ costs.

Swiss relief

Bloomberg reported that Switzerland has offered to invest in the US gold-refining industry to persuade the Trump administration to lower the 39% import tariff imposed last month. Should Trump capitulate, the move could give Compagnie Financiere Richemont SA (CFRZ-TRQX) a boost.

Get in on the NAV discount

Discounts to net asset value (NAV) have narrowed for Prosus (PRX-JSE), thanks to a string of announcements: two IPOs in India, signals of more to come, an extension of its JustEat offer to October 1 (dependent on selling part of its Delivery Hero stake), and OLX’s purchase of French auto classifieds site La Centrale. However, Naspers’ (NPN-JSE) discount to Prosus remains wide. For context, NAV represents the value of all a company’s underlying investments. When a stock trades at a discount to NAV, it means the market is valuing it for less than the sum of its parts. Narrowing discounts suggest growing investor confidence that Prosus can unlock more of that hidden value.

Steely resolve

The Industrial Development Corporation (IDC), South Africa’s top development finance institution, is working with financial advisers on a possible $491 million bid for control of ArcelorMittal SA’s (ACL-JSE) business in the country. The bid would end almost two years of negotiations with the state firm, the government’s trade and industry department and the global steelmaker, and could pave the way for the entry of other international steel companies.

Copper cop-out

Institutional investors in Glencore (GLENL-TRQX) have grown increasingly frustrated with the commodity giant’s underperformance as it misses out on much of the copper rally. At a time when miners globally are rushing to produce more copper, Glencore’s copper production is expected to drop for a fourth straight year. The IEA expects the global supply of mined copper to peak later this decade at around 24 Mt, before falling as ore grades decline, reserves become depleted, and mines are retired. Glencore shares have fallen 30% in the past three years, lagging its closest peers, as a plunge in coal prices has hamstrung its most profitable division.

Stock focus: Boxer

South African retailer Boxer (BOX-JSE) has kept up its growth streak, with sales up almost 14% for the first half of the year, which is slightly stronger than the earlier run-rate. Shoppers are still spending, and the company managed to squeeze out a bit more momentum over the past two months. Inflation’s basically flat, which helps. Earnings are expected to rise up to 9% year-on-year, though the big jump in shares on the market after last year’s IPO means the per-share figure will look lower. Even so, Boxer is running a little ahead of forecasts, and with the stock trading on the cheap side compared to its history, the stronger sales and solid earnings guidance should give the share price some support, making this one a solid buy!